- Savings account
- Emergency fund
- Growth stocks
Your 20s is the best time to get aggressive with your portfolio, as you’ll have the longest time to recover from any market setbacks. You’ll also be able to take advantage of the power of compound interest, as it takes some time to really see those effects.
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Of course, when you’re in your 20s, you’re likely just starting out in the working world, meaning your income may be at the lowest level you’ll see in your entire career. This means two things:
First, you should prioritize establishing an emergency fund and a savings account. This will help you get through any rough patches and help you avoid going into debt. Second, while you won’t be able to plow tons of money into your investment accounts, even small amounts can make a big difference at this young age.
As incredible as it may seem, just a $160 monthly investment at a 10% annual return can result in a nest egg of over $1 million 40 years down the road. In other words, by investing in growth stocks for the long run, historically speaking, even a small amount set aside monthly has yielded impressive returns.